Financial Focus

Women Must Know What To Expect From Social Security

Everyone needs to be aware of the financial resources they will have available in retirement. But if you’re a woman, you must be particularly diligent, for a variety of reasons. And that means you’ll need to know just what to expect from Social Security.

Why should you, as a woman, pay extra attention to Social Security? For one thing, women often take time off from their careers to care for children and older parents, so they may accumulate less money in employer-sponsored retirement accounts, such as 401(k) plans. And women still live several years longer than men, according to the Census Bureau.

Clearly, then, you need to get the most you can from Social Security. To do so, you will need to consider at least three key factors:

•Age – You can start taking retirement benefits as early as 62, but your benefits may be reduced by up to 30 percent unless you wait until your “full retirement age,” which is likely 66 or 67. If you delay taking benefits until 70, your monthly benefits may be up to a third larger than if you started collecting Social Security at your full retirement age. You’ll need to weigh a variety of factors – such as family longevity, income from employer-sponsored retirement plans and your anticipated financial needs – in determining when you should start taking Social Security.

•Employment – If you work while receiving Social Security benefits before you reach full retirement age, your benefits will be reduced by $1 for every $2 you earn over an annual limit, which generally increases each year. In the year you reach full retirement age, your benefits will be reduced by $1 for every $3 you earn over the limit before your birthday. But once you reach full retirement age, your benefits will no longer be adjusted for earned income.

•Marital status – As a spouse, you can generally receive Social Security payments based on your own earnings record or Membercollect a spousal benefit of up to 50 percent of your husband’s Social Security benefit. The benefit will be reduced if you start taking it before your full retirement age. To start collecting Social Security spousal benefits, you must be at least 62 years old and your husband must also have filed for his own benefits. If you’re divorced, and you’re not currently married, you can generally receive benefits on your ex-husband’s Social Security record, as long as you meet certain conditions. (For example, you had to have been married to your ex-husband for at least 10 years.)

No matter how much Social Security you ultimately receive, it’s almost certainly not going to be enough to provide all the income you’ll need. So during your working years, try to contribute as much as you can, for as long as you can, to your IRA and your 401(k) or other employer-sponsored retirement plan. At the same time, look for other investment opportunities. And when you reach retirement, create a withdrawal strategy that allows you to stretch out the income you receive from your investments for as long as you can.

By saving and investing as much as possible during your working years, maximizing your Social Security payments and carefully managing your financial assets when you’re retired, you can help improve your chances of enjoying the retirement lifestyle you deserve.

This information is believed to be reliable, but investors should rely on information from the Social Security Administration before making a decision on when to take Social Security benefits. It is general information SIPC and not meant to cover all scenarios. Your situation may be different, so be sure to discuss this with the Social Security Administration prior to taking benefits.